What are the ending cash balances

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Problem - Durango Mountain Bike Tours' ending cash balance as of December 31, 2020 was $10,000. Its expected cash collections and payments for the next six months are given in the following table.

Month

Collections

Payments

January

$18,563

$21,825

February

30,881

35,100

March

51,075

48,600

April

81,844

68,344

May

109,688

90,113

June

141,750

107,100

Required -

a. Calculate the firm's expected ending cash balance for each month.

b. Assuming that the firm must maintain an ending cash balance of at least $12,000, how much must they borrow during each month?

c. If the firm must pay 5% annual interest on its short-term borrowing, what are the ending cash balances for each month?

d. What are the ending cash balances if the firm uses any cash in excess of the minimum to pay off its short-term borrowing in each month?

Reference no: EM132712335

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